Thursday, September 24, 2009

JLR unveils new plan for revamp, unions restive

Tata Motors-owned Jaguar Land Rover today unveiled what it called a new business plan for the next decade, under which it will invest substantially in a new range of eco-friendly vehicles.

The plan, designed to increase global competitiveness, drive growth and sustain profitability, envisages an investment of £800 million (over Rs 6,200 crore) on environmental innovation alone, part-supported by the European Investment Bank.

The plan will also see the company shutting one of its plants in the UK, but, it promises, without any job loss. Rather, it says, it is likely to add 800 more jobs by the middle of 2010.

A company spokesperson also said the new Range Rover production will start by 2011, the preparation for which will commence by the middle of next year. Apart from the new Range Rover, the company also proposes to develop a new light weight sedan, sports cars and sports utility vehicles and "electrification technology" (to produce hybrid cars).

Jaguar Land Rover Chief Executive Officer, David Smith said: "This is a plan that recognises the impact the economic collapse has had on our business, and at the same time the opportunities that lie ahead for these two great brands. We are confident that a new more efficient and competitive structure, combined with future investment, will unlock the true potential of this business."

The company said it plans to rationalise production between two of its plants in the West Midlands. The plan could result in the moving of production from one plant to another, leaving one of the plants redundant. At the moment, one produces Jaguars and the other makes Land Rovers.

However, workers are suspicious. GMB, a key union in the company's 14,500 strong work force, in its initial reaction to news of a possible plant closure said wants details “GMB will be opposing everything we have heard so far. We will fight the company on this – of that I have no doubt,” said Bert Hill, their regional officer.

"The car industry has been through an unprecedented recession. New car sales, including those of Jaguar and Land Rover, are down globally by 25-30 percent. This has resulted in manufacturing capacity utilisation of less than 60 percent at Jaguar Land Rover, which combined with the credit crunch, has exposed fundamental weaknesses in the structure of the business," a JLR statement said.

Over the past year, production in JLR was reduced by more than 1,00,000 units; spending and costs were cut; jobs reduced by 2,500; pay frozen and bonuses cancelled. "But this was not enough to offset the full magnitude of the downturn and the company swung from profit in 2007 to significant losses over the past 12 months. This was not a sustainable situation. Actions taken have started to reverse the trend, quarter over quarter, and we now have to take the company to the next level of competitiveness," the statement from JLR said.

Though no firm decision has been made, the company is also looking at potential local manufacturing in cost-competitive markets like India.